Are Genel Energy plc, Monitise plc and AFC Energy plc set to rise or fall by 20%?
In the last six months, shares in Genel Energy(LSE: GENL) have fallen by 50%. This could lead many investors to believe that market sentiment is on the decline and that Genel is a stock to avoid.
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However, the period has been a tale of two halves, with Genel's share price initially falling heavily due to a declining oil price as well as a reduction in reserves estimates for one of its key assets. In recent weeks though, Genel's share price has begun a recovery of sorts, rising by 66% since its February low.
Clearly, there's scope for the oil price rise to continue and for investor sentiment towards Genel to improve. However, Genel also appears to offer significant risks, with the expected impairment to its asset base resulting from lower reserve estimates likely to hurt investor sentiment over the medium term. And with Genel still suffering from relatively high geopolitical risks, there appear to be better options within the oil and gas industry for long-term investors.
Profits ahead?
Similarly, mobile payments specialist Monitise(LSE: MONI) is up by a rather modest 5% since the turn of the year. However, Monitise has risen sharply since its February low, with it being up over 70% since then.
Clearly, investor sentiment has improved dramatically even though Monitise is forecast to remain in the red during each of the next two financial years. And while its pre-tax losses are due to narrow to £33m this year and £15m next year, the company still appears to be some way off developing a business model that results in profitability.
Certainly, Monitise has an excellent product and has enjoyed considerable success in winning major blue chip clients. But with threats from other mobile payment solutions and the constant challenges of innovation, it may be prudent for investors to await evidence of a black bottom line before buying a slice of the company.
Capital gain prospects
Meanwhile, AFC Energy(LSE: AFC) has endured a very disappointing 2016 so far, with its share price falling by 37% since the turn of the year. That's despite investor demand for the company's shares seeming to be high, as evidenced by this year's placing, which was oversubscribed by 3.8 times.
While its recent performance has been markedly worse than its 2015 share price rise of 122%, AFC Energy has considerable capital gain prospects. That's largely because the world is moving towards the greater use of clean energy, which means that AFC Energy may be well-positioned to benefit.
Furthermore, AFC Energy has a sound strategy though which to deliver on its long term potential. Encouragingly, in 2016 it is focusing on the continued development of its capabilities and remains on track to deliver 1GW of capacity installed or under development by 2020. And with the scope for commercial agreements to be signed over the medium term, buying AFC Energy right now could prove to be a profitable long-term move.
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Peter Stephens owns shares of AFC Energy. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
